It's a little complex, but I think a simple example might help.
If you have a transaction with a non-arm's-length non-resident, the Canada Revenue Agency currently has an additional three-year reassessment period. They can go back a little further to reassess. Let's say that the taxpayer claimed a loss of $100 and that as a result of this reassessment within the previous period it was reduced to a $40 loss, so that $60 of the loss had been denied. That entire loss had been carried back three years, as is permitted, to offset income by the taxpayer in an earlier taxation year.
Normally, the rule would say, okay, if your loss is reduced in a particular year and you had carried that back up to three years, even if that previous year you've carried it back to is outside of your normal reassessment period, you have an additional three years. The problem was that if you had an assessment that was within the extended period for transfer pricing assessment—it was already within an additional three-year period—and you carried it back to before the start of that additional three-year period, then the CRA would be out of time, even though the clear policy in the act is that, if in a particular year your loss is reduced and that's carried back to offset income in a previous year, then the CRA should be able to go back to that previous year and make the appropriate adjustments.